Just registered my new business for v.a.t (standard vat scheme) from 25th Feb 2016 and have received vat number, will not start trading till March 1st, however i need to make one or two purchases before 25th Feb, can the vat on these purchased be claimed?
Do you mean 25th January? Allowable pre-trading expenses are fine if purchased after you were vat registered (I imagine you mean January) and certain purchases are claimable pre vat registartion.
No as stated 25th Feb, business will not start trading till March and although it is a while since i have had to deal with this i was pretty sure that you were allowed to claim on business related expenses in the period before trading if vat registered. Incidentally although a new business, it is a going concern with a turnover of £300K, existing seller has other shops and which he is keeping using his existing vat number, hence new vat registration.
Sorry Richard, I assumed it being the 25th meant you had mis-typed my apologies. All should be ok though as long as the goods still in your possession as John says, unless they are used for exempt sales. Be careful not to claim vat on things like electric that has been used in the business prior to registration.
Are you buying the business? Should you be registered prior to purchase? Can't remeber the rules but have afeeling you might need to be to claim the vat...
Hi Rob, yes i am registered for v.a.t and set the date for 25th Feb as the legals were drawing so was not quite sure when it would all go through. The v.a.t i am looking to claim for is for a new laptop for the business, accounting software, so all business related and travelling expenses to attend a trade fair next week. I should imagine in total the vat element will only amount to around £150 in total, so not a great deal in the great scheme of things, but every little bit helps!
Hi
Be careful with this. An interesting article here, which also talks about the sneaky change that HMRC have made last year (which I think was talked about on here at the time).
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
The one's that disappear always are... I have soooo many web pages hived away because I don't trust the interweb not to eat them at some stage.
Excellent spot there Jo. I really should do a trawl of the site and fix anywhere that advice remains incorrect shouldn't I as from memory it's something thats cropped up a few times.
Maybe in a few days as bit busy at the mo.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
The one's that disappear always are... I have soooo many web pages hived away because I don't trust the interweb not to eat them at some stage.
Excellent spot there Jo. I really should do a trawl of the site and fix anywhere that advice remains incorrect shouldn't I as from memory it's something thats cropped up a few times.
Maybe in a few days as bit busy at the mo.
OMG - That could take you forever. Surely everyone takes old posts with a pinch of 'oh it might now be out of date?' There are loads of things on Aweb but if its a little bit long in the tooth I still go and dig elsewhere to check its not changed. Well ok I do that with newer stuff, but perhaps not as religiously.
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
I can't read the full article, but is it related to adjusting the value to what it's worth now as opposed to when it was bought? Anyone know if that's been challenged yet? From memory this is HMRC re-interpretating the leglislation and from what I recall, there are valid reasons for opposing it.
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John
Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
1. VAT on goods purchased up to 4 years before VAT registration eg assets and stock but you need to still own them at date of VAT registration
2. VAT on services purchased up to 6 months before VAT registration. So you can claim things like VAT on electric pre VAT registration but only for the 6 months prior to VAT registration.
1. VAT on goods purchased up to 4 years before VAT registration eg assets and stock but you need to still own them at date of VAT registration
2. VAT on services purchased up to 6 months before VAT registration. So you can claim things like VAT on electric pre VAT registration but only for the 6 months prior to VAT registration.
Which is what everyone has always worked to but of course (quoting the article from Taxation magazine) HMRC have moved the goalpostsand are blaming EU legislation for the new system not being so generous. Have a read of that article in the link and you will see what I mean.
Apparently the changes came in in 2011 but they are only starting to act upon their new guidance now.
The most worrying thing about all this is that the rules that they are enacting are at odds with their own published guidance (VAT 700 & 701). You would think that discrepancy would offer you protection wouldn't you... Apparently not.
Oh bum, I was just going to reference a bit from that Taxation article but for some reason an article that I could read in full yesterday I can now only read the start of before it gets into anything technical.
Hang on a sec...
ok, try this link to Tax Journal : http://www.taxjournal.com/tj/articles/claiming-pre-registration-input-vat-16092015 (which is actually the one that Joanne was attempting to point to but for some reason her link posted yesterday didn't work).
As can plainly be seen, claiming the full amount as I'm sure 99% of accountants still advise (and until reading these articles I would have counted myself amongst them) is no longer valid... The big question has to be though, why are HMRC hiding the rules that they are working to / chasing people under and publishing guidance that is at odds with it.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Excellent article, and one that echo's my sentiments on the matter entirely. Good to see that it's being challenged. So what do you do now Shaun, stick with the old way or follow the new guidance? I haven't done one since I learnt of the new guidance, but would be sorely tempted to stick to the old way. The trouble is, unless the client is willing to back and fund it through the necessary tribunals, it's a win win situation for HMRC.
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John
Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
Hi I have a customer who has been trading for a few months and will be registering for VAT shortly. I've never claimed for pre-registered VAT before, so I am following this closely.
How would you "prove" you still own at the date of registration? Its easy with fixed assets, however, for other things, would a stock count be sufficient i.e. they are a Sign Printers and often buy paper/signage materials in bulk.
